2024 H2 Economics Paper 1 Case Study 1: Suggested Answers
The case study examines the supermarket industry in the United Kingdom and Singapore, drawing on it to test oligopoly characteristics, control of supply chains, merger regulation by the CCCS, and price versus non price competition.
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A two mark data comparison from Table 1, contrasting the change in forecast total retail grocery sales with the change in online sales over 2021 to 2026.
Both the forecast total retail grocery sales and the online sales increased between 2021 and 2026.
However, online sales increased to a greater extent than the forecast total retail grocery sales.
Award one mark for the common trend (both rising) and one mark for the difference in the rate of change.
Tests: Demand and supply analysis
A four mark explanation of two factors likely to determine the forecast increased demand for online shopping.
Change in consumer tastes and preferences. The shift towards online shopping, heightened by the COVID-19 pandemic, reflects a change in tastes and preferences. As consumers adjusted to social distancing, many turned to online shopping to minimise physical interaction. This became a longer term habit rather than a temporary adjustment, as consumers grew accustomed to the convenience and safety of shopping from home, sustaining higher demand.
Advancements in technology. Improvements in mobile devices have widened the pool of consumers able to shop online. As smartphones and tablets become more capable and ubiquitous, browsing, selecting and paying becomes quicker and easier, drawing in even less tech savvy consumers and raising overall demand for online shopping.
Two distinct demand determinants, each clearly linked to the rise in demand for online shopping.
Tests: Demand and supply analysis
A four mark application question asking for two features of UK supermarkets, evidenced from Extracts 1 and 2, that demonstrate the characteristics of an oligopoly.
Market dominance by a few large firms. Figure 1 implies a four firm concentration ratio of about 67.9 per cent, with Tesco, Sainsbury's, Asda and Morrisons together holding a large share of the market. A high concentration ratio is a defining feature of an oligopoly, where a few firms hold significant market power.
Mutual interdependence. Extract 1 notes that Tesco and Sainsbury's run price match schemes in response to rivals such as Aldi and Lidl, and Extract 2 describes Tesco as a price leader whose pricing changes are followed by smaller rivals. Each firm sets its strategy with close reference to the actions of others, which is the mutual interdependence characteristic of an oligopoly.
A third feature that could be used instead is high barriers to entry inferred from supermarkets controlling their supply chains. Students should select any two.
Two features, each named and evidenced with a quotation or figure from Extracts 1 or 2.
Tests: Oligopoly, Barriers to entry
A two mark question asking for one possible reason, with reference to Extracts 1 and 2, why supermarkets might seek to control their supply chains.
One reason is to raise barriers to entry. By securing exclusive supplier agreements or integrating suppliers into their operations, established supermarkets make it harder for new entrants to access essential inventory, helping incumbents protect their supernormal profits and market dominance.
An alternative reason is vertical integration to reap internal economies of scale, as with Morrisons owning farms and production facilities. This lowers average costs and gives the firm flexibility on pricing. Students should select any one reason.
One reason, developed with reference to the extracts.
Tests: Barriers to entry, Economies of scale
An eight mark discussion of whether the CCCS should intervene in a hypothetical merger between Sheng Siong and DFI, given the effects on consumers and other supermarkets.
- Define the market power concern and set up the case for intervention, working from the combined market share against the CCCS thresholds in Extract 4.
- Develop the consumer harm side: how reduced competition affects choice, price setting power and the elasticity faced by the merged firm.
- Build the counter case: identify the efficiency argument a merger could offer and why a regulator might hold back.
- Weigh the two sides against the stated CCCS intervention criteria, deciding which threshold is breached.
- Reach an evaluative judgment, noting that the claimed efficiency is not guaranteed, and state the conditions under which it holds.
This part is gated. The full model answer with the worked market share calculation and the evaluative judgment, with the diagrams and the full evaluation, is in the ETG TYS Answers book from SAP and is worked live in the TYS Crashcourse. ETG students also get the AI TYS coach that guides them through this exact question. Message the team to find out more.
A ten mark discussion of whether price competition is the best way for supermarkets to raise revenue.
- Frame the question around an oligopoly and define the revenue objective.
- Examine price competition as one route, and reason through why mutual interdependence complicates it.
- Set out at least one non price alternative and explain the mechanism by which it could raise revenue.
- Bring in a second alternative that exploits a relationship between goods the supermarket sells.
- Compare the alternatives on their effectiveness at raising revenue and conclude with a supported judgment.
This part is gated. The full model answer comparing price and non price competition, with the diagrams and the full evaluation, is in the ETG TYS Answers book from SAP and is worked live in the TYS Crashcourse. ETG students also get the AI TYS coach that guides them through this exact question. Message the team to find out more.
Tests: Oligopoly, Price discrimination
Questions students ask
Where can I get the full worked answers to the 2024 H2 Economics paper 1 case study 1?
The full model answers, with the diagrams and the higher mark evaluation, are in the ETG TYS Answers book published by SAP and sold at Popular, and are worked live in the TYS Crashcourse. Every ETG student also gets the AI TYS coach on our learning management system, which guides you through how to tackle every essay and every case study question from the last ten years.
Are these the official 2024 A Level Economics answers?
No. SEAB sets and marks the A Level paper. These are suggested answers by Mr Eugene Toh, author of the H1 and H2 A Level Economics TYS answer keys, published by SAP and sold at Popular.
How are these case study suggested answers structured?
The lower mark parts are answered in full. The higher mark parts are outlined here, with the full worked answers reserved for the ETG TYS Answers book and the TYS Crashcourse.
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